Return to Addenda

ITEM EX7
Supplement

EXECUTIVE – 7 SEPTEMBER 2004

REVENUE BUDGET AND CAPITAL PROGRAMME 2005/06 – 2007/08

Supplementary Report by Head of Finance

     

  1. A paper to the Executive on 7 September set out our advice about the Council’s 2005/06 Budget. This assumed that in 2005/06, the County Council would be paid at least £353.6m of grant and business rates – an increase of 6.1%, as mentioned in paragraph 18 of the Executive paper. This left us with a contingency of £6.7m if we increased Council tax by 6%.

  2. As the paper was released we received advice from Somerset (where a team who advise County Councils about the grant settlement is based) that our grant might only be £350.7m. This is £2.9m less than the lowest figure that we had expected in the Executive paper. Of this reduction, £1.1m is due to removing the responsibility for contributing to the Magistrates Courts service. This is in addition to the £3.4m function change mentioned in paragraph 12 of the Executive paper. Budget changes will be needed to allow for this £1.1m function change.

  3. This may leave us with £1.8m less grant than we expected. The contingency could reduce to £4.9m, as follows:

    		4.

    Executive paper 7/09/04

    Somerset figure

    Grant increase

    6.9%

    6.5%

    6.1%

    5.5%

    Grant

    £356.2m

    £354.9m

    £353.6m

    £350.7m

    Contingency - 6% tax rise

    £9.3m

    £8.0m

    £6.7m

    £4.9m


  4. The main reason why Somerset’s grant forecast is lower is that they exclude the £340m extra grant that was announced by the Chancellor in December 2003. Paragraph 52 of the Executive report discusses this issue. The draft Recommendations of the Executive paper ask officers to continue to pursue this issue.

  5. Somerset’s figures are only estimates, based on various assumptions about what the government will do. We will not know what grant we are actually going to be paid until January 2005, though we should get a first estimate in late November 2004.

  6. Uncertainty about grant figures makes it difficult for the Council to plan. A £1.8m reduction in grant would most likely reduce the contingency by a similar figure and it is also equivalent to a 0.8 percentage points rise in Council tax.

CHRIS GRAY
Head of Finance

Background Papers: Nil

Contact Officer: David Illingworth, Accountancy, Tel (01865) 815352

1 September 2004

Return to TOP